The Payroll Protection Loan: What You Need To Know

With the onslaught of Coronavirus-19 (COVID-19), state governments have had to shut down their economies mid-March. Today, the Wall Street Journal reported that counties that ordered a lockdown represent 96% of the U.S. economy. As such, millions of businesses have temporarily (perhaps permanently) shut down. This has forced the Federal government to step in and create the Payroll Protection Program, a $349 billion program offering relief to small businesses to avoid disaster. Find out to see if you qualify for the Payroll Protection Loan.

Do you qualify for the Payroll Protection Program?

You qualify for the business loan if you have a payroll with fewer than 500 W-2 employees.

Here are the limitations & guidelines.

• Loan proceeds must be used to cover payroll costs, mortgage interest, rent and utility costs over an 8-week period.
• You must maintain the same pay level for your employees.
• “Payroll costs” for the PPP Loan are capped at $100,000 per employee.
• The loan is forgivable, but not more than 25% of the loan may be used for non-payrolls costs.
• Payroll costs includes paid sick leave.

Here is the full communication from the U.S. Treasury PPP Fact Sheet

Requirements

• A Payroll Protection Program application
• Proof of payroll
• Application window is April 3 – June 20, 2020

It’s important to note, these guidelines are simple but they can be confusing. For example, if you reduce your head count in the 8 week period, the amount of the loan that is forgivable goes down.

Is the PP Loan Forgivable? Yes, but Be Careful

Generally, yes. However, if you reduce your headcount, lower the wage you pay your employees, or misstep in any other way not in accordance with the guidelines, then some of the loan will not be forgivable. To improve the chances that your entire loan is forgivable, do the following in the 8 week window after you get the loan:

• Do not fire any employees
• Do not reduce the amount you pay each employee
• ONLY use the funds for payroll (including sick leave), utilities, rent and your mortgage payment

Do not buy inventory. Do not buy Facebook ads. Do not pay yourself a bonus. Just read the Treasury’s guidelines over and follow the basic tenants of the loan.

How can I request PPP Loan forgiveness?

Excerpt from the U.S. Treasury’s fact sheet. You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

Where can I apply for a Payroll Protection Loan?

We’ve partnered with Fundera, America’s leading business loans marketplace, to help you with your PPP Loan Application.

Other providers that are facilitating applications include: